Having a healthy relationship with money is going to be a very important asset that will benefit you and your family for the rest of your life. Many people have an unhealthy relationship with money resulting in crippling debt, owning no assets and having no or limited finance available for retirement, making you either dependent and a burden on your family members or having to continue to work long after retirement age.
Proper financial planning will ensure that you meet the financial responsibilities for your family and help to prevent a financial crisis due to unexpected expenses.
Create A Financial Calendar
Most of your expenses are probably monthly expenses but there may be things like insurance policies that are paid annually or study fees that are paid per term or semester. Don’t forget to accommodate for your tax returns and payments.
Include an allowance for things such as annual doctor’s visits, car services and any other expense that occur throughout the year.
By creating a financial calendar and keeping track of it you will be prepared for most expenses that come your way each year.
Create A Monthly Budget
It is so easy to overspend and come short at the end of the month. The best way to manage your monthly spending is to create a budget and stick to it as closely as possible.
Here are some examples of things you may need to include in your budget:
- Rental or bond repayments
- Credit card and debt repayments
- Travel/ car and fuel expenses
- Insurances (car, medical, house)
- Retirement fund
- Electricity, water and rates
- Telephone and internet
- School fees and other monthly membership fees
- Satellite and/ or streaming subscriptions
It is important to keep assessing and adjusting your budget to ensure that it is working well for you. There is no point in trying to work with an unrealistic budget and over time your needs will keep changing and evolving.
Always allow a little bit extra “padding” allowance for unexpected expenses – there is always going to be something that comes up, or a bill that increases.
Make sure to always pay your most important expenses so that if there is a shortfall somewhere it will result in the loss of a luxury (such as your streaming subscription) rather than an essential such as your rent or food.
Pay Off Debt Faster
Most people have debt at some stage in their lives, whether it be a home loan, student loans or credit cards. It is important to try and pay off as much of your debt in as short a time as possible. The longer you are paying off debt the more you will pay in transaction costs, interest and other fees.
There are many tactics you can use to pay off your debt faster such as tackling the debt with the most interest first, or tackling the smallest bills first and then adding that monthly amount to add to the next smallest debt amount until you are paying off only the biggest debtor.
It is always advisable to pay more than the due amount each month rather than only setting the minimum payment amount.
Gladiator Lending recommends looking into a consolidation loan if your debt is crippling.
A consolidation loan can make paying off your debt much easier. Paying off one company is much easier than paying multiple accounts each month and you may be able to negotiate a better interest rate and repayment plan.
Savings and Retirement
Make sure to budget for savings every month, even if you put away a small amount each month it is a start and will add up over time. Split up your savings into different things. You will need an emergency savings stash for in case of emergency. You must be able to access this money quickly and easily in case of an emergency so don’t have it tied up in investments that you cannot access immediately.
Start a retirement plan as early as you can – the earlier you start the more chance you have of having enough money to live out your retirement in comfort without any stress.
You may want to set up other savings policies such as a study fund for your children or save up for a deposit on a home.
In this day and age insurance is absolutely essential. It may seem like an unnecessary expense each month but the truth is that insurance will will be a life saver when you need it. You never know when you may have a car accident or fall ill and need to be hospitalized. Your home may burn down or be broken into and all your belongings stolen.
Here are some examples of insurance you should consider getting:
- Life insurance
- Medical insurance
- Car insurance
- Home owners insurance
Set Long Term and Short Term Financial Goals
Having set financial goals will help you to plan your finances and to achieve far more than if you just take things as they come. Short term goals can include things like buying furniture for you home and paying off debts. Long term goals can include things like buying your first home.
Be specific and about what you want to achieve and assess regularly whether you are on track and the goals that you have managed to achieve.
Gladiator Lending Tips for Loans and Credit
Getting into debt is so easy, but getting out can turn out to be quite difficult. Gladiator Lending advises to make sure to carefully assess your finances before considering taking out a loan.
Getting a loan is not always bad. Most people cannot afford to buy their first home upfront and have to take out a home loan to be able to buy a house.
Here are some things to consider when taking out a loan:
- What is the true cost of the loan? Pay careful attention to the interest amount, the transaction fees and other charges, as well as when the repayments are due. Shop around and make sure that you are getting the best deal. Find out what happens if you miss a payment.
- Check the small print and your credit rating. You may find that your credit rating plays a part in your loan offer. You may find that you get a more expensive deal if your credit rating is low.
- Check the terms for early repayments. If you take out a loan you may want to pay it off early, but it is important to know that many financial institutions charge you if you repay your loan early.